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HCI DOUBLES PROFIT BUT NAFHOLD LEFT IN THE COLD

Hosken Consolidated Investments (HCI) has more than doubled its full-year profit but its fellow shareholder in Tsogo Investment Holdings (TIH) is crying foul, saying HCI is “strangling” it by not declaring a dividend in TIH for two consecutive years in order to force it to sell. HCI told the JSE on Friday that its net income climbed to R574.7 million in the 12 months to March, from R231.2 million a year earlier. HCI owns 75 percent of TIH and Nafhold holds the remainder. TIH owns 51 percent of Tsogo Sun Holdings, one of the largest and most profitable gaming and hotel groups in the country with assets such as Johannesburg’s Montecasino. The other 49 percent in Tsogo Sun is held by SABMiller. HCI has made no secret of its ambition to own 100 percent of TIH but Nafhold has been a stumbling block, refusing to sell its stake. Nafhold is the investment arm of the National African Federated Chamber of Commerce and Industry (Nafcoc). Michael Leaf, Nafhold’s chief executive, said HCI had used its majority status in TIH to prevent TIH from declaring a dividend for two years. Nafhold’s shareholding in TIH is its biggest investment. Nafhold’s biggest shareholders are the Nafcoc Investment Trust (44.2 percent) and the Nafcoc Investment Holding Share Trust (10 percent). Leaf said: “I believe HCI are forcing us into a corner to sell. They are starving us to death, while they are trying to consolidate their position.” The TIH board had not held a meeting for the past two years and directors` fees had not been paid, Leaf said, and it was difficult to say how much dividend Nafhold should expect from TIH without knowing the results of Tsogo Sun. HCI has consolidated Tsogo Sun’s results with effect from December 1 after taking control of TIH. It said: “Tsogo Sun group had an excellent year with Ebitdar [earnings before interest, tax, depreciation, amortisation and rent] for the year growing by 23 percent to R1.9 billion. “Net interest bearing debt at year end was R1.04 billion. Tsogo Sun gaming performed above expectations, with casino revenue up 16 percent from the 2006 financial year and Ebitda up 22 percent on that year. ” Last November HCI went public with its offer to buy Nafhold`s TIH interest for R750 million. The offer was rejected by the Nafhold board, which said it was not sufficient. HCI upped the ante in January by revising its offer to R900 million and saying it would allow Nafhold to sell its investments, minus its stake in TIH, without reducing its R900 million price tag. This revised offer was again rejected by Nafhold. HCI shares gained 0.26 percent to R75.25 on Friday, while the equity investment instruments sector added 0.57 percent

Source: Business Report – Sunday Independent – Wiseman Khuzwayo